National differences in political economy
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chapter. National Differences in Political Economy. McGraw-Hill/Irwin Global Business Today, 5e. © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 2. INTRODUCTION This chapter explores how the political, economic, and legal systems of countries differ.

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Chapter

chapter

National Differences in Political Economy

McGraw-Hill/Irwin

Global Business Today, 5e

© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

2


Chapter 2 national differences in political economy

INTRODUCTION

This chapter explores how the political, economic, and legal systems of countries differ.

Together these systems are known as the political economy of a country.

Chapter 2: National Differences in Political Economy


Chapter 2 national differences in political economy1

POLITICAL SYSTEMS

A political system is the system of government in a nation

Political systems can be assessed according to:

the degree to which they emphasize collectivism as opposed to individualism

the degree to which they are democratic or totalitarian

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Chapter 2 national differences in political economy2

Collectivism and Individualism

Democracy and Totalitarianism

Chapter 2: National Differences in Political Economy


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ECONOMIC SYSTEMS

A free market system is likely in countries where individual goals are given primacy over collective goals

State-owned enterprises and restricted markets are common in countries where collective goals are dominant

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Market Economy

Command Economy

Mixed Economy

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LEGAL SYSTEMS

The legalsystem of a country is the rules, or laws, that regulate behavior, along with the processes by which the laws of a country are enforced and through which redress for grievances is obtained.

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Different Legal Systems

Differences in Contract Law

Property Rights and Corruption

The Protection of Intellectual Property

Product Safety and Product Liability

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THE DETERMINANTS OF ECONOMIC DEVELOPMENT

Differing political, economic, and legal systems can have a profound impact on the level of a country's economic development, and hence on the attractiveness of a country as a possible market and/or production location for a firm.

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Differences in Economic Development

Broader Conceptions of Development: Amartya Sen

Political Economy and Economic Progress

Geography, Education, and Economic Development

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STATES IN TRANSITION

Since the late 1980s, a wave of democratic revolutions has swept the world, and many of the previous totalitarian regimes collapsed

There has been a move away from centrally planned and mixed economies towards free markets

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STATES IN TRANSITION

The Spread of Democracy

The New World Order and Global Terrorism

The Spread of Market-Based Systems

The Nature of Economic Transformation

Deregulation

Privatization

Legal Systems

Implications of Changing Political Economy

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IMPLICATIONS FOR MANAGERS

Political, economic, and legal systems of a country raise important ethical issues that have implications for the practice of international business

The political, economic, and legal environment of a country clearly influences the attractiveness of that country as a market and/or investment site

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Benefits

Costs

Risks

Overall Attractiveness

Chapter 2: National Differences in Political Economy


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